Top 10 Checklist for Launching a Specialty Pharmacy

March 2015 : Specialty Pharmacy - Vol. 12 No. 3 - Page #1

An increasing number of health systems are implementing specialty pharmacies to take advantage of the explosive growth of outpatient specialty medications. According to PP&P’s July 2014 Biologics supplement, 15% of health systems currently operate specialty pharmacies.1 But with specialty pharmaceuticals reported to be the fastest growing segment of drug spending, the percentage of health system-run specialty pharmacies is likely to increase. As a result, pharmacy managers, many with little or no outpatient experience, are being charged with establishing such operations and call centers, securing referrals from clinics, and producing profits for the health system, often in a time frame of one year or less.

Although starting a specialty pharmacy may seem straightforward, implementing a continuously profitable operation can be quite challenging, especially in today’s managed care landscape. Substantial skill and dedication are necessary to build a specialty pharmacy that successfully impacts both patient care and the facility’s bottom line. 

The University of Illinois Hospital and Health Sciences System (UI Health) is a nonprofit, 495-bed, academic health center located on the southwest side of Chicago. It has 4,000 employees, over 60 outpatient clinics, and 12 federally qualified health centers. As the state’s only health system, it serves some of the area’s most vulnerable patients, with a high proportion of Medicaid, Medicare, and uninsured patients. 

Missed Opportunities
Our venture into specialty pharmacy began in 2007, when we made an interesting discovery. At that time, we already had a well-established network of seven ambulatory care pharmacies with individual pharmacy services in transplant, oncology, and HIV/AIDS, as well as clinical pharmacists embedded in most of our specialty clinics. Nevertheless, some of the most widely prescribed specialty prescriptions for conditions such as multiple sclerosis, rheumatoid arthritis, and inflammatory bowel disease, were being sent to outside pharmacies. For example, even though we have highly trafficked rheumatology and gastrointestinal clinics that treat rheumatoid arthritis, inflammatory bowel disease, and Crohn’s disease, etc, we were filling only one prescription for adalimumab per month. We could not quantify the total number of missed opportunities (or assess their value) because many were not documented in the EHR. Often prescribers were handling these prescriptions with hub forms—one-page prescription forms that are faxed directly to pharmaceutical manufacturers or contracted agents, who oversee all insurance and authorization issues and supply the drug directly to the patient via a specialty pharmacy. Thus, the initial driver of the specialty pharmacy project was to capture this revenue that was leaving our health system. 

During the process, 10 factors surfaced as key to the successful establishment and ongoing management of the enterprise. 

1. Establish Goals, Mission, and Vision
Our initial goal was to capture and fill at least one new specialty prescription per week. Our mission was to improve medication access for our patients by providing specialty pharmacy services. Our vision was for providers to first think of UI Health Specialty Pharmacy Services when prescribing a specialty medication. 

2. Develop a Financial Pro Forma
The specialty pharmacy service initially was staffed by of one pharmacist who was appropriated from one of the other UI Health pharmacies and who remained working in that pharmacy, performing her new prior authorization and prescription management duties for the specialty pharmacy as part of her daily responsibilities. To ensure we could cover our costs, we calculated the value of each patient prescription. For example, if a specialty prescription has a “profit” of $100, and the patient is on therapy for one year, then the value of that patient prescription is $1200 per year. Once this first pharmacist’s time was covered by prescription capture, we used the above formula to calculate the number of prescriptions we needed to capture and fill in order to justify additional hires. Our initial goal was to be self-supporting, and later to profit. We were able to continue in this way—using existing pharmacists part-time in their separate locations and growing the business—from 2007 to 2012, when we received approval from administration to consolidate our efforts and establish a true specialty pharmacy call center. At this time, the pharmacist who had been handling most of the specialty responsibilities along with the rest of her job became a full-time specialty pharmacist, and we hired one technician. We also hired a clinical liaison pharmacist, who helped us establish our call center functions, and two full-time pharmacy students assisted during the summer months. 

3. Identify Product Opportunities
Next we defined our market and target therapeutic categories by mining the CPOE database and downloading all electronic prescribing records from our outpatient clinics to determine the potential for specialty pharmacy services. A limitation of this approach is that not all specialty prescriptions are e-prescribed. Although the data gathered probably underestimated the true potential, this approach allowed us to identify the broadest therapeutic opportunities. Based on our monthly data mining, we developed services for rheumatology, multiple sclerosis, inflammatory bowel disease, sickle cell disease, and women’s health, among others. 

4. Define Customer Opportunities
Once product opportunities were defined, we turned our attention to identifying customers. Potential customers for any health system may include patients, hospital employees, students, and the general public. A primary consideration is determining whether the pharmacy will serve only its own patients or be open to retail operations. Because UI Health is an own use institution, we dispense prescriptions only to our patients, employees, and students. Some health systems build successful specialty pharmacies by establishing exclusive arrangements solely for their employees’ prescriptions. Plentiful opportunities to negotiate arrangements exist if the patient or employee base is large.

5. Investigate Payer Opportunities
Having identified customer opportunities, the next step was to conduct a needs assessment of our primary payers: Medicaid and Medicare Part D. Illinois is in the process of transitioning 50% of its Medicaid patients to managed care by early 2015. Every day we speak with patients who had traditional government Medicaid insurance and now have a managed care plan for which we may or may not have a contract; some Medicaid managed care companies restrict the filling of specialty prescriptions to certain contracted specialty pharmacies. Supplemental specialty pharmacy contracts may be required.

Although Medicare Part D allows any willing pharmacy to dispense specialty medications, private commercial payers may not. Some commercial payers do not allow UI Health to fill specialty prescriptions, which presents a significant medication access challenge to our patients. In the future, we hope to increase our capacity to serve all of our patients without restrictions. 

6. Develop a Prescription Capture Model
Consider how prescriptions written by your health-system providers will be captured by the specialty pharmacy. How will leakage—ie, sending prescriptions to other specialty pharmacies—be prevented? At UI Health, we sent our first specialty pharmacist to the GI clinic once per week to capture prescriptions by helping with prior authorization. That was the start of our specialty pharmacy call center, which now processes over 100 new prior authorizations and reauthorizations each month for prescriptions we fill in the specialty pharmacy. The key to our capture model is embedding clinical pharmacists in all of our specialty clinics to facilitate identification of potential opportunities. Without this strategy, we would not have a robust specialty pharmacy operation. 

If embedding specialty pharmacy staff in clinics is not an option, consider utilizing in-house advertising to make your existence and services known to all of the facility’s units and clinics and ask for their specialty prescription business. 

7. Consider Infrastructure and Long-Term Growth 
At UI Health, our infrastructure grew as we expanded from one pharmacist to our current staff of four pharmacists, two certified pharmacy technicians, two student pharmacists, and many independent study and experiential pharmacy students from the College of Pharmacy located across the street from the hospital. The infrastructure of a specialty pharmacy differs from that of an ambulatory or retail pharmacy. First, much of the work in a specialty pharmacy entails prior authorizations and medication access issues and occurs prior to actually filling the prescription. In fact, the specialty pharmacy at UI Health coordinates the final dispensing with our existing outpatient pharmacies (see TABLE 1). 

Click here to view a larger version of this Table

Obtaining insurance approval for a new specialty medication can sometimes take days or weeks. Sofosbuvir, for example, a new agent used to treat hepatitis C, may take weeks to be approved by most insurance plans. Physicians writing prescriptions for the drug know to set the start date for three to four weeks after seeing a patient because authorizations can take that long. In addition, insurance plans often approve an agent for a limited period of time. In the case of sofosbuvir, reapprovals from the insurance company may be required for every two-week supply of the drug. Approvals for agents being used for off-label purposes also generally require a significant amount of time. 

Another infrastructure issue to consider is the specific delivery, handling, storage, and/or preparation requirements that accompany many specialty medications. Most require refrigeration, and many come with specific delivery requirements, such as signature upon receipt. One challenge we discovered early on was related to the delivery service we used. If a medication was delivered when a patient was not home, sometimes it would be returned to a warehouse but not refrigerated as required. These medications then had to be discarded. Lost medications also were a periodic issue. 

To remedy this situation, we hired a local courier service that is a division of a major private ambulance company in Chicago. The service designates one car (with a refrigerator inside) and one HIPAA-certified driver, so the opportunity for lost packages is minimized. The driver is directed to hand all prescriptions directly to patients or their caregivers. He works for us six hours per day and never leaves packages unattended at patients’ homes; rather, any undeliverables are returned to us for proper storage until another delivery attempt is made. We save packing time and supplies and have not lost any medications since the service started.

Lastly, some hospitals choose to establish their specialty pharmacy call centers and dispensing in offsite office or warehouse locations, which can allow for tremendous expansion.

8. Monitor Safety and Outcomes 
Specialty pharmacy services are clinical functions, and specialty medications are high-risk drugs that require robust, comprehensive management. Therefore, UI Health employs an outpatient medication safety pharmacist to oversee clinical guidelines, risk evaluation and mitigation strategies (REMS), and therapeutic drug safety monitoring, in addition to conducting monthly clinical surveys. 

9. Manage and Utilize Data 
One of the greatest values of a health system-based specialty pharmacy is its capacity for data collection and reporting. The EHR provides excellent opportunities for data mining to improve patient care. As an example of how we use our enhanced data-cultivating capacity to improve communication with patients, staff in our specialty pharmacy call center generally have three systems open on their computer screens at all times: 1. the EMR, which conveys the patient’s medical history and all current details about their care; 2. the pharmacy dispensing system, which identifies the agents that have been dispensed; and 3. the specialty pharmacy case management system, which tracks all prior authorizations, clinical surveys, and phone calls with patients, insurance providers, etc. Using this comprehensive data, staff in the call center can provide seamless continuity of care and have highly detailed conversations with patients, such as: 

Mrs. Smith, your prescription for x is due for renewal next week. I see from your record that your physician has changed the dose. We have already obtained approval from your insurance plan for that new dose. I also see from your record that you have an appointment in the clinic next Tuesday. Would you like us to have your medication ready for you to pick up at the clinic while you are there? 

Similarly, our information systems enable us to optimize communication with providers. Using a series of templates, we can communicate specialty pharmacy tasks and any notes or issues of concern to providers via the EHR. This frequent communication is appreciated by UI Health providers. For example, we conduct benefit verification within one day of receiving a referral for a specialty medication from any of the outpatient clinics. If we determine that the prescription can be filled at UI Health, we use the following template as a note in the EMR: 

Specialty Pharmacy Services received a referral for [medication] from [provider] on [date]. The prescription insurance is [name of insurance]. These medications are in network and can be filled at UI Health Specialty Pharmacy. Prior authorizations will be started. 

Once the prior authorization is approved, we use the following template: Specialty Pharmacy Services received a referral for [medications] from [provider] on [date]. Prior authorizations were submitted by Specialty Pharmacy Services to [insurance] and were approved on [date] with an expiration of [date]. The prescriptions can be filled at UI Health Specialty Pharmacy Services. Contact number is 6-5224.

10. Develop Management Guidelines
The specialty pharmacy administrator should have a management plan that outlines current and future staffing and organizational structure, job descriptions, policies and procedures, metrics, patient satisfaction measures and goals, and accreditation. UI Health is currently in the process of obtaining URAC accreditation for our specialty pharmacy; full accreditation is anticipated in 2015.

Since 2012, the primary services of the UI Health specialty pharmacy service have included case management/refill management, benefit verification, prior authorizations, appeals, medication assistance, copay assistance, medication adherence monitoring and counseling, and data collection and reporting. We coordinate closely with the specialty clinics and the ambulatory pharmacies. At least one pharmacist is on duty at the call center at all times, meaning a pharmacist is available to patients 24/7. In 2012, we filled 1868 prescriptions; in 2014, we expect to fill or refill 4,555 prescriptions. Although we are eager to assume more prescriptions and consolidate those currently handled by our ambulatory pharmacies, we are limited by space. Assuming prescriptions for additional disease areas would require us to find larger accommodations; this likely would require a move off campus, which conflicts with our top priority of proximity to our patients. 

Lessons Learned 
As we developed our specialty pharmacy, three tenets became clear: 

  • First, although it is relatively straightforward to establish a specialty pharmacy, it is quite demanding to manage one on an ongoing basis. The thrill of getting new prescriptions wears off quickly once the challenges of obtaining prior authorizations, resolving insurance issues, managing an efficient delivery service, and ensuring patient and provider satisfaction set in. Effective pharmacy management requires a committed, creative, detail-oriented staff. Hiring people who are problem-solvers with a strong sense of urgency helps with obtaining prior authorizations for patients who are often gravely ill and in need of expensive, life-saving medications. 
  • Second, for a specialty pharmacy to succeed, staff must focus not only on obtaining new prescriptions, but also on maintaining refills. Specialty pharmacy is an extremely competitive business; staff must be continuously vigilant about retaining existing business by providing exceptional customer service. All of our hires must have extraordinary phone skills; communicating in a courteous manner and conveying empathy are requisite. Also, it is important to know your patient population; you may need staff members who speak a second language. 
  • Finally, it is important to remember that the ultimate goal of implementing a specialty pharmacy is to increase patient access to medications. Every day at UI Health we hear success stories from patients whose conditions improved because we obtained their medication quickly or helped them overcome insurance or financial roadblocks. Although a specialty pharmacy should contribute to the hospital’s bottom line, the most significant benefit is ensuring patients receive the medications they need in a timely and efficient fashion.


  1. Specialty Pharmacy. Biologics Supplement. Pharm Purch Prod. July 2014;S8.  

JoAnn Stubbings, BS Pharm, MHCA, is a clinical associate professor and manager of research and public policy in the ambulatory pharmacy and assistant director of specialty pharmacy services in the department of pharmacy practice at the University of Illinois Hospital and Health Sciences System, Chicago, Illinois.


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